1st India-EU High-Level Dialogue on Trade and Investment held

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    In News: The First High-Level Dialogue (HLD) as agreed under 15th India-EU Leaders Summit, 2020 was held on 5th Jan 2021.

    Key Outcomes:

    • Both emphasised the need to deepen global cooperation and solidarity via regular engagement in the Post COVID era.
    • Next meeting in 3 months with the aim to arrive at a consensus on different bilateral trade and investment relations viz. bilateral Regulatory Dialogue; an India-EU Multilateral Dialogue.
    • Both decided to reinvigorate the renewed India-EU commercial and Economic Partnership to achieve full potential.

    Challenges Ahead:

    For a successful India-EU trade pact both need to be harmonious, strong and stable but the situation seems a bit different. Few challenges are as listed below:

    • Reasons behind the failure of the previous Comprehensive Free Trade Agreement, 2007 are still the same. The mutual differences are over issues like
      • The movement of professionals, labour, human rights and environmental issues
      • India’s high tariffs, inconsistent tax regime and non-payment of arbitral awards.
    • Brexit: Before Brexit, the EU had GDP equal to the USA and was one of the major trade partners of India. Now, the EU is relatively weak.
    • Further 3 major challenges which may weaken the EU and in turn hamper prospects of India-EU Deal are as follows
      • Turbulent situation in the European Union:
        • Internal Discord: After a long negotiation, the EU was able to take Hungary and Poland onboard for COVID-19 recovery package of USD 2 trillion.
        • Euroscepticism: Many countries have soon coming elections and eurozone and migration crises and implementing COVID-19 lockdowns may be a major issue raised. It will further destabilise the unity of the EU.
        • Further, sentiments against Islam and anti-secular migrants may create trouble.
        • No agreement over Security and Defence: France wants more autonomy while Germany, Netherlands and Portugal want to rely on NATO.
      • International Scenario: The key driver over here was Trump’s Policies.
        • It forced the EU to relook into its self reliance in Defence, Economy, Security and Supply chains.
        • Turkey, China, Russia and Iran have flouted different Treaty Rules due to Trump’s Foreign Policies.
      • COVID-19 crisis
        • Netherlands saw riots first time in the last 40 years
        • Divisive Vaccine Nationalism and few initial restrictions by Germany and France on the export of PPE kits has created a mutual distrust.
        • Anticipated 60% shortfall in vaccine procurement is challenging an already turbulent EU.

    Way Forward:

    As said by John Adams, “every problem is an opportunity in disguise”, India should climb up the scenario in pursuit to strengthen and maintain Europe’s unity and integrity.

    • India can help the EU by sending its own Indigenous Vaccines.
    • India should also seek technology transfer and deeper defence and economic tie-ups with Europe to diversify the supply chain of the EU.
    • India can also pose as a soft power with the example of Unity in Diversity.

    India can be a great player in ensuring the EU’s solidarity and hence the trade deal will be mutually beneficial and should be forwarded with enormous political will and adroit skill.

    Background: India EU Relations

    • India-EU bilateral relations date back to the early 1960s with India being amongst the first countries to establish diplomatic relations with the European Economic Community in 1962.
    • EU-India Cooperation Agreement 1994 provides the legal framework for EU-India relations. India and the EU have been strategic partners since 2004.
    • Since the Lisbon summit in 2000, India has belonged to a small group of countries including the US, China, Russia, Japan and Canada among others with whom the EU holds regular summits.
    • The relationship was upgraded to a ‘Strategic Partnership’ during the 5th India-EU Summit held in 2004 in The Hague.
    • The 14th India-EU Summit was held on 6 October 2017 in New Delhi.

    Trade & Investment–

    • EU is India’s largest trading partner, accounting for 11.1% of total Indian trade, on par with the USA and ahead of China (10.7%) in 2019 where as India is EU’s 10th largest trading partner
    • EU is the second-largest destination for Indian exports (over 14% of the total) after the USA
    • Trade in goods between the EU and India increased by 72% in the last decade.
    • Nearly 6,000 European companies are present in India, providing directly 1.7 million jobs and indirectly 5 million jobs in a broad range of sectors.

    Fig: India-EU Trade at a glance (Source: European Union)

    Deadlock in Broad-based Trade and Investment Agreement (BTIA):

    • The negotiations on this agreement were started in 2007 in Brussels, Belgium.
    • It covered
      • Trade in Goods,
      • Trade in Services, Investment, Sanitary and Phytosanitary Measures,
      • Technical Barriers to Trade, Trade Remedies,
      • Rules of Origin, Customs and Trade Facilitation, Competition, Trade Defence,
      • Government Procurement,
      • Dispute Settlement,
      • Intellectual Property Rights & Geographical Indications,
      • Sustainable Development
    • The problems crept in over the issues like
      • The EU wanted to include the environment, labour, and government procurement in the talks.
      • Data secure status and Easy Visa policy were major demands by India

    Sectoral Cooperation–

    • Infrastructure
      • European Investment Bank (EIB) opened its first office for the South Asian region in 2017, headquartered in New Delhi.
      • The EIB has extended loans for the Lucknow Metro Project and the Bangalore Metro Phase II Project
    • Energy
      • Joint Working Groups have been constituted under the India-EU Energy Panel to deal with Coal, Clean Coal Technology, Energy Efficiency/ Renewable Energy.
    • Environment
      • India-EU Joint Working Group on Environment: Deals with prevention of pollution, waste minimisation, protection of Biological diversity, sustainable forest management, environmental education etc.
        • Joint Working Group’s Meeting held in New Delhi in 2017 created India- EU Environment Forum.
      •  EU Commissioner for Environment, Maritime Affairs and Fisheries led a Circular Economy Mission to India in 2018.
        • Its aim was deepening cooperation in policy formulation and fostering business opportunities
    • Different Joint Working Groups on Water; Pharmaceuticals, Biotechnology & Medical Devices; Agriculture and Marine and a dialogue on Information and Communication Technologies (ICT) were also set up to deepen cooperation in respective fields.
    • Horizontal Agreement on Civil Aviation between India and the EU, which was signed in 2008 became operational in February 2018.

    Source: TH

     

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